Thursday, October 1, 2026
New York lawmakers need to stop pretending that a $1 million home is a mansion.
In 1989, when the state created a 1 percent tax on residential properties selling for $1 million or more, the threshold was intended to target luxury homeowners. At the time, it made sense. Thirty-seven years later, it doesn’t. A property on Long Island valued at $1 million back then now costs roughly $4.5 million.
On Long Island, $1 million can buy a perfectly ordinary home. In Nassau County, the median home price is now around $880,000, and in Suffolk County, it’s roughly $750,000, both near historic highs. In communities where demand remains strong and inventory remains tight, a $1 million price tag is no longer an indication that someone is purchasing a sprawling estate. It may simply mean they’re buying a house.
That’s why the State Legislature should make reforming the so-called mansion tax a priority in 2027.
Five major Long Island business organizations — the Association for a Better Long Island, HIA-LI, the Long Island Builders Institute, the Long Island Association and the Long Island Contractors Association — have called for changes to the law. Their proposal deserves serious consideration.
The problem isn’t simply that the threshold is outdated. The structure of the tax is flawed. Once a home reaches $1 million, the additional 1 percent tax applies to the entire purchase price. A house selling for $999,999 doesn’t incur the tax. A house selling for $1 million does — an additional $10,000 charge.
That is an illogical cliff. A buyer doesn’t suddenly become wealthy because a home’s sale price crosses an arbitrary line. And on Long Island, where housing costs have risen so dramatically, the tax increasingly falls on middle-class families rather than the ultra-wealthy buyers the law was designed to target.
New York already collects a transfer tax on real estate transactions. The additional $10,000 on a $1 million purchase isn’t insignificant, particularly when buyers are already dealing with high mortgage costs, property taxes, insurance, maintenance and closing expenses.
There is a legitimate argument for taxing luxury real estate. New York needs revenue, and those who can afford exceptionally expensive homes can reasonably be asked to contribute more. But that argument falls apart when the definition of luxury becomes disconnected from reality.
The Legislature shouldn’t eliminate the mansion tax. It should modernize it. First, lawmakers should substantially increase the threshold to reflect today’s housing market. Second, they should index that threshold to inflation or an appropriate measure of housing prices, so the law doesn’t become obsolete again. And third, they should seriously consider regional thresholds, because $1 million means something very different in Manhattan, Nassau County and upstate New York.
The goal should be a tax that targets genuine luxury purchases — not families buying modest homes in one of the nation’s most expensive housing markets.
The state cannot simultaneously complain about its high cost of living and defend a tax structure that adds thousands of dollars to the cost of buying a home simply because the housing market has appreciated.
If New York wants more people to live, work and raise families here, it should be looking for ways to make homeownership more attainable, not preserving arbitrary barriers created nearly four decades ago. The Legislature has had plenty of time to reconsider the mansion tax. Now it should do so.
In 1989, $1 million could make you the owner of a Long Island mansion. Today, it may simply make you a homeowner. New York’s tax policy should reflect that reality.
